Washington Extra – Line dance

Here’s something that Republicans might want to hear: the White House is promising that its budget will include serious deficit control.

“The budget will show a very serious path of deficit reduction,” White House Office of Management and Budget Director Jack Lew said in an interview with Reuters’ White House correspondents Alister Bull and Jeff Mason.

While the budget will make “tough choices and tough cuts,” Lew said, “there will also be the question of how far do you want to go in some of these areas and what are the consequences of going beyond a certain line.”

That line and where it is drawn will be scrutinized when Obama releases his budget proposal on Feb. 14 (yes, Valentine’s Day).

Speaking of lines, the United States appears to be taking a tougher one with its ally of 30 years, Egyptian President Hosni Mubarak. While not calling for Mubarak’s immediate departure, the White House said transition must start right away. “Now means now,” White House spokesman Robert Gibbs said.

A senior U.S. official tells Foreign Policy Correspondent Arshad Mohammed that it was clear that someone loyal to Mubarak unleashed pro-Mubarak forces to try to intimidate Egyptian protesters and that Washington believed there was debate in Mubarak’s inner circle about whether he needed to do more on protesters’ demands.

The protesters and opposition forces in Egypt are watching for whether the line gets crossed that would prompt the United States to call on Mubarak to step down.

Here are our top stories from Washington today…

Obama budget to get serious with deficit: Lew

President Obama’s upcoming budget will lay out a credible plan to lower the deficit but the funding gap will grow initially due to the extension of tax cuts, Obama’s budget chief said. “The budget will show a very serious path of deficit reduction,” White House OMB Director Jack Lew told Reuters in an interview.

The White House said Egyptian President Hosni Mubarak must begin to take concrete steps toward democratic elections now but stopped short of calling on him to step down immediately. Publicly, officials repeated President Obama’s call for an orderly transition of power to “begin now.” But privately, one official voiced suspicions that Mubarak’s government was instigating violence in Egypt.

For more of this story by Arshad Mohammed and Patricia Zengerle, read here.

Lawmakers differ on aid cutoff to Egypt

Lawmakers are unlikely to slash aid to Egypt quickly, but they are watching to see where unrest there leads. Views of the turmoil vary on Capitol Hill. For now, the Republican-run House of Representatives seems more cautious than the Democratic-run Senate about cutting U.S. aid to Egyptian President Hosni Mubarak’s government, which has been running at $1.5 billion a year.

The U.S. believes Egyptian President Hosni Mubarak’s inner circle is debating whether he needs to do more to meet the demands of protesters seeking his ouster, an Obama administration official said. The official, who spoke to Reuters on condition of anonymity, said clashes between pro- and anti-Mubarak forces could convince the Egyptian military that it needs to pressure Mubarak to take additional steps.

The situation in the Middle East is “fragile” with countries like Egypt and Tunisia caught in a dilemma of “partial modernization” in which the political system does not allow the masses to benefit from economic advances, the head of the World Bank said in an interview with Reuters. World Bank President Robert Zoellick said the lender was ready to move quickly to support nations in the region as they press forward with economic and political reforms. “We are in a very fragile situation, not only for Egypt but for a number of countries across the Middle East,” he said.

Senate Democrats said they had enough votes to block a Republican bid to repeal President Obama’s healthcare overhaul, likely leaving the law’s fate to the Supreme Court. “I expect the overwhelming majority of Democrats to vote against (repeal),” said Senator Charles Schumer.

The U.S. will hit a $14.3 trillion statutory limit on its debt slightly later than previously estimated. Treasury officials said the limit would now be hit between April 5 and May 31, versus a previous estimate of end-March to mid-May. Officials said they were proceeding with borrowing plans under the assumption Congress will raise the limit without a protracted battle, an assumption financial markets share. How much it should be raised is a question for Congress, they said.

Wednesday’s massive winter storm is the latest pain in the budget for cities and states as it sweeps across the continent, freezing finances along the way. The snow and ice storm has hit some 30 states and a third of the population, some of whom have gone on their Twitter feeds to dub it “Stormageddon” and “snOMGeddon.” From Rhode Island to North Carolina, funds set aside to clear roads and sidewalks have run dry. To make matters worse, the price of salt used to melt ice and snow has doubled in recent years.

Top Wall Street firms are urging the Treasury to create new products for investors and have suggested an ultra-long bond with a maturity of 100 years. The Treasury’s debt advisory panel recommended at a meeting that the government develop products for three different investor classes: banks, pension funds and insurers, and retail investors. The new offerings would be a way to pump up domestic demand for the government’s securities.

President Obama and Republican Senator John McCain, bitter rivals from the 2008 election campaign whose feud festered for two years, completed a thaw when they sat down for Oval Office talks. Obama’s defeat of McCain in the 2008 presidential election left sour feelings on both sides that lingered through Obama’s first two years in office.

Astronomers have spotted a strange new solar system with small “puffy” planets packed in close orbit to their sun. The discovery, published in the journal Nature, is mystifying astronomers and illustrates just how much variety is possible in the universe. The team at NASA and a range of universities has named the system Kepler-11, after the orbiting Kepler space telescope that spotted it.

District Judge Reggie Walton probably feels like he is living and breathing baseball. He is presiding over the case about whether Roger Clemens lied to Congress about not using steroids, and he comes from the same hometown as baseball superstars Ken Griffey Sr. and Stan Musial. During a brief court hearing, Walton alerted lawyers involved in the case that he had run into Griffey Sr. a couple of months ago in their tiny hometown of Donora, Pennsylvania, and that the former outfielder remarked that Clemens was “a good guy.”

Anti-secrecy website WikiLeaks has been nominated for the Nobel Peace Prize, the Norwegian politician behind the proposal said. Parliamentarian Snorre Valen called WikiLeaks “one of the most important contributors to freedom of speech and transparency” in the 21st century. “By disclosing information about corruption, human rights abuses and war crimes, WikiLeaks is a natural contender for the Nobel Peace Prize,” Valen said.